Changing cars... Every 3 years or much longer?

PhilL_3

AdrianHi wrote: »

I like the new Mondeo and I've had a ride in an S-Max - ride, handling, refinement of the 140bhp diesel all top notch and very impressive.

MJTHFC,
Just how much effort are you prepared to put into researching what to buy, when to buy and when to sell?
I know of someone who over a 2 year period has owned the following cars:
Audi A3 s-line, A4 cab, A6 avant, 535d, M3 CSL, Mini and an S4 avant.
In that 2 year period he has paid out about £10,000 in depreciation and finance charges. He uses balance lease purchase finance. It means you put down a minimal deposit with a balloon, a bit like PCP accept balanced lease is not front loaded with interest payments like PCP deals usually are. It means capital and interest are paid off from day 1 so you can settle the loan whenever you want without penalty. This is crucial for playing this game.
£10,000 in 2 years is a lot of money, but go back and read through that list of cars again and look at what he has been driving for £5K a year which is the kind of money you loose in depreciation alone on a Mondeo bought new in it's first 2 years.
The key to making this work is:
Buying the car nearly new - ex-demonstartor, when the car has just come on the market and is in high demand. For example the 535d Sport Touring had been on the market for about 4 months, hugely desirable new model, when he got it. List price 48K with just the "right" options on it, he rang round dealers with 3 month old ex-demonstrators up for sale at the end of a quarter (desperate to grab sales to meet bonus targets) and made them an offer of £35K. Some said no, one said yes, he got the car. He kept the car just under a year putting 20,000 miles on it. He sold it privately for £32,500. For finance charges and depreciation that was a £300 a month car, £3600 for one year. You cannot do this with a Mondeo, it would cost you far more.
Try to do that now with the same car and it would not work, there's plenty of these cars in the used market. Timing is critical to getting this right and have to have the courage to make dealers silly offers and take the chance on the resale working out.
For me, it's too much work and a bit risky, but it shows what can be done if you know what you are doing.
The M3 CSL was an interesting one. Had it 6 months and made a £2,000 profit on that one

Anyone game?

This is the tactic I like but then I like to think I know a bit more than the average punter.Be aware that balanced payments schemes are now only available to businesses (or high net worth individuals earning over 150k pa!) following recent FSA changes.A new car IMO is best for high mileage business users or those opting out of a company scheme. In these cases you need a car you can rely on and have piece of mind if something goes wrong. A PCH or PCP deal tends to make most sense as you are not sinking a large cash amount into a depreciating asset.Bangernomics and buying an older car makes perfect sense if you do lower mileages and/or don't rely on your car so much.In a similar vain to the Lexus mentioned I love the idea of getting a big luxo-barge like an Audi A8 or an Alpina B10 but you absolutely HAVE to be aware of the potential huge bills and running costs!

PhilL_3

PS sorry for the lack of formatting; for some reason my paragraphs and smilies get taken out of my posts when I use my work computer??!!

AdrianHi

PhilL wrote: »

This is the tactic I like but then I like to think I know a bit more than the average punter.Be aware that balanced payments schemes are now only available to businesses (or high net worth individuals earning over 150k pa!) following recent FSA changes.A new car IMO is best for high mileage business users or those opting out of a company scheme. In these cases you need a car you can rely on and have piece of mind if something goes wrong. A PCH or PCP deal tends to make most sense as you are not sinking a large cash amount into a depreciating asset.Bangernomics and buying an older car makes perfect sense if you do lower mileages and/or don't rely on your car so much.In a similar vain to the Lexus mentioned I love the idea of getting a big luxo-barge like an Audi A8 or an Alpina B10 but you absolutely HAVE to be aware of the potential huge bills and running costs!

I've realised that these balance schemes are off the market for private buyers just recently too.
My solution next time around (since I'm falling a bit short of 150K pa )will be using my flexible mortgage to finance a car instead and making sure I pay back the mortgage account at the same rate (or quicker) than I would with another finance package. This gives me back the flexibility of the balance lease purchase schemes. I'm fortunate to be in the position where I can do this and still stay on track for clearing the mortgage by my target date. Mind you if there is any cheaper finance going than the mortgage I'd still use that is part. I'll be avoiding PCP because the flexibility to sell up the car and get out of the loan is important to me and I doubt any PCP will work out cheaper than using the flexible mortgage to do it.

PhilL_3

Completely agree; if you have the option to use your mortgage (and the discipline to over pay etc) then that works out very cheap finance indeed, and easier to chop and change cars without penalty.

Jorgan_2

I find the best way to buy a used car is to barter hard and be prepared to walk away if the deal isn't the one you want. Too many people get caught up in the emotion of buying something new.

I ran a Cavalier SRI for a year, years ago. Sold it for what I paid for it. Peugeot last year, sold it after four months for £900 more than I paid for it. My dad bought a car a few years back, the guy was asking £7k, after the test drive my dad put £3,300 on the bonnet, half an hour later it was his for £3300. He decided that was the most he wanted to pay for the car, so thats all he took with him.